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The professional services sector in 2016

The professional services sector in 2016

The professional services sector demonstrated resilience through the economic crisis and contributed to the positive growth rates in the Cypriot economy in the 1st quarter of 2015, the first after fourteen quarters.

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Board Member, Chairman KPMG in Cyprus and Head of Corporate Services

KPMG in Cyprus

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The professional services sector demonstrated resilience through the economic crisis and contributed to the positive growth rates in the Cypriot economy in the 1st quarter of 2015, the first after fourteen quarters. 

Certainly, challenges remain, as competition and investors’ demands are increasing and becoming more complex. For this reason continuous effort is required for the improvement of the quality of services provided and the reinforcement of the products offered. 

In 2015, with the cooperation of all the professional services sectors, the Ministry of Finance and the House of Representatives, implemented two packages of tax measures, which are expected to increase Cyprus’ competitiveness.

Moreover, many treaties for the avoidance of double taxation have been concluded, (including the renegotiation of treaties already in force or the enactment of new treaties), while the treaties’ network is expected to be further enhanced in 2016. 

The rate of registration of new companies is increasing, a trend which is expected to continue in 2016. This is due to the gradual regain of investors’ trust in the Cypriot economy and the stabilization of the financial system. The upgrading of the Cypriot economy by credit rating agencies, in combination with the significant improvement of fiscal rates and the positive evaluations of the economic adjustment programme, support the efforts of the sector’s professionals in order to attract investments and establish Cyprus as a financial services centre.

Beyond the provision of tax and audit services, the sector’s professionals continuously reinforce the quality but also the types of services offered. In 2016 we expect an increase in services relating to the restructuring of credit facilities and the credit system, the laws of the insolvency framework, companies’ administration, feasibility studies, business plans and optimum funding ways.

Moreover, the completion of the institutional framework and the tax incentives which have been implemented in relation to collective investments undertakings (funds), predict a positive horizon in 2016. The purpose is to render Cyprus as a powerful centre for the licensing and establishment of such undertakings, as well as their managers.

It is important to note that the professional services sector has effectively contributed to the efforts made in other sectors of the economy, such as shipping, tourism, construction, research and innovation as well as start-ups, in order to steer the Cyprus economy towards the path of recovery. The following year is expected to be especially important as far as the energy sector is concerned, bearing in mind the expected developments in relation to the natural gas reserves in the Cyprus Exclusive Economic Zone (EEZ).

One of the biggest challenges of this year is the implementation of the Standard for Automatic Exchange of Financial Account Information (Common Reporting Standard) of the Organisation for Economic Co-operation and Development (OECD). It is imperative as the systems and procedures of the financial services providers are ready to properly implement the provisions of the Common Reporting Standard. This of course involves increased administrative costs, as well as the proper collaboration between all professional sectors, bodies and the Tax Department.

2016 is expected to be an important year, not only for the course of the financial services sector but also of the Cypriot economy. In order for Cyprus to be an attractive and strong business centre and for citizens to have at their disposal high quality services, properly addressing the completion of the economic adjustment programme should constitute a priority, with efforts being made to continue with the implementation of necessary reforms. 

KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative ("KPMG International") a Swiss entity. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International Cooperative ("KPMG International") or KPMG member firms.

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